SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| (Mark One) | ||
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For The Quarterly Period Ended June 30, 2003 |
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| OR |
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| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File Number 0-26825
NORTHWEST BIOTHERAPEUTICS, INC.
(Exact Name Of Registrant As Specified In Its Charter)
| DELAWARE | 94-3306718 | |
| (State or Other Jurisdiction of | (I.R.S. Employer Identification | |
| Incorporation or Organization) | No.) |
Canyon Park Building 8, 22322 20th
Avenue S.E., Suite 150, Bothell, Wa. 98021
(Address of Principal Executive Offices, Including Zip Code)
(425) 608-3000
(Registrant’s Telephone Number, Including Area Code)
21720 23rd Dr. S.E., Suite 100,
Bothell, Wa. 98021
(Registrant’s Former Address)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of August 8, 2003, the registrant had outstanding 19,030,776 shares of common stock, $0.001 par value.
NORTHWEST BIOTHERAPEUTICS, INC.
TABLE OF CONTENTS
| Page | ||||||
PART I — FINANCIAL INFORMATION |
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Item 1. Financial Statements (unaudited) and Supplementary Data |
3 | |||||
Condensed Balance Sheets |
3 | |||||
Condensed Statements of Operations |
4 | |||||
Condensed Statement of Cash Flows |
5 | |||||
Notes to Condensed Financial Statements |
6 | |||||
Item 2. Management’s Discussion and
Analysis of Financial Condition and
Results of Operations |
8 | |||||
Item 3. Quantitative and Qualitative
Disclosures About Market Risk |
21 | |||||
Item 4. Controls and Procedures |
21 | |||||
PART II — OTHER INFORMATION |
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Item 1. Legal Proceedings |
21 | |||||
Item 2. Changes in Securities and Use
of Proceeds |
21 | |||||
Item 3. Defaults Upon Senior Securities |
22 | |||||
Item 4. Submission of Matters to a Vote
of Security Holders |
22 | |||||
Item 5. Other Information |
22 | |||||
Item 6. Exhibits and Reports on Form 8-K |
22 | |||||
SIGNATURES |
22 | |||||
INDEX TO EXHIBITS |
23 | |||||
Exhibit
10.1 |
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Exhibit
10.2 |
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Exhibit
31.1 |
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Exhibit
31.2 |
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Exhibit
32.1 |
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Exhibit
32.2 |
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2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
NORTHWEST BIOTHERAPEUTICS, INC.
(A Development Stage Company)
Condensed Balance Sheets
(unaudited)
(in thousands)
| June 30, | December 31, | |||||||||||
| 2003 | 2002 | |||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 709 | $ | 2,539 | ||||||||
Marketable securities |
— | 704 | ||||||||||
Accounts receivable |
88 | — | ||||||||||
Accounts receivable from affiliates |
— | 3 | ||||||||||
Receivable from Medarex |
816 | 1,124 | ||||||||||
Prepaid expenses and other current assets |
319 | 745 | ||||||||||
Total current assets |
1,932 | 5,115 | ||||||||||
Property and equipment: |
||||||||||||
Leasehold improvements |
66 | 739 | ||||||||||
Laboratory equipment |
566 | 952 | ||||||||||
Office furniture and other equipment |
133 | 272 | ||||||||||
| 765 | 1,963 | |||||||||||
Less accumulated depreciation and amortization |
368 | 615 | ||||||||||
Property and equipment, net |
397 | 1,348 | ||||||||||
Restricted cash |
105 | 1,109 | ||||||||||
Total assets |
$ | 2,434 | $ | 7,572 | ||||||||
Liabilities And Stockholders’ Equity |
||||||||||||
Current liabilities: |
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Note payable |
$ | 105 | $ | 420 | ||||||||
Current portion of capital lease obligations |
52 | 73 | ||||||||||
Accounts payable |
235 | 497 | ||||||||||
Accrued expenses |
341 | 241 | ||||||||||
Accrued loss on facility sublease,
current portion |
— | 418 | ||||||||||
Total current
liabilities |
733 | 1,649 | ||||||||||
Long-term liabilities: |
||||||||||||
Capital lease obligations, net of
current portion |
69 | 98 | ||||||||||
Deferred rent |
— | 158 | ||||||||||
Due to Medarex |
— | 280 | ||||||||||
Accrued
loss on facility sublease, net of current portion
|
— | 511 | ||||||||||
Total liabilities |
802 | 2,696 | ||||||||||
Stockholders’ equity: |
||||||||||||
Common stock, $0.001 par value;
125,000,000 shares authorized and
18,940,776 and 17,930,276 shares issued
and outstanding at June 30, 2003 and
December 31, 2002, respectively |
19 | 18 | ||||||||||
Additional paid-in capital |
63,998 | 63,794 | ||||||||||
Deferred compensation |
(200 | ) | (444 | ) | ||||||||
Deficit accumulated during the
development stage |
(62,185 | ) | (58,492 | ) | ||||||||
Total stockholders’
equity |
1,632 | 4,876 | ||||||||||
Total liabilities
and stockholders’
equity |
$ | 2,434 | $ | 7,572 | ||||||||
See accompanying notes to condensed financial statements.
3
NORTHWEST BIOTHERAPEUTICS, INC.
(A Development Stage Company)
Condensed Statements of Operations
(unaudited)
(in thousands, except per share data)
| Three Months Ended | Six Months Ended | Period from | ||||||||||||||||||||
| June 30, | June 30, | March 18, 1996 | ||||||||||||||||||||
| (inception) to | ||||||||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | June 30, 2003 | ||||||||||||||||||
Revenues: |
||||||||||||||||||||||
Research material sales |
$ | 7 | $ | 6 | $ | 7 | $ | 9 | $ | 343 | ||||||||||||
Contract research and development from
related parties |
— | — | — | — | 1,128 | |||||||||||||||||
Research grants |
180 | — | 249 | — | 348 | |||||||||||||||||
Other |
— | — | — | — | 33 | |||||||||||||||||
Total revenues |
187 | 6 | 256 | 9 | 1,852 | |||||||||||||||||
Operating expenses: |
||||||||||||||||||||||
Cost of research material sales |
40 | 5 | 40 | 8 | 291 | |||||||||||||||||
Research and development |
500 | 2,243 | 1,008 | 3,596 | 23,358 | |||||||||||||||||
General and administrative |
1,437 | 2,078 | 2,503 | 3,764 | 24,288 | |||||||||||||||||
Depreciation and amortization |
50 | 163 | 137 | 305 | 2,001 | |||||||||||||||||
Loss
on facility sublease and lease cancellation |
174 | — | 174 | — | 895 | |||||||||||||||||
Asset impairment loss |
904 | — | 904 | — | 1,936 | |||||||||||||||||
Total operating expenses |
3,105 | 4,489 | 4,766 | 7,673 | 52,769 | |||||||||||||||||
Loss from operations |
(2,918 | ) | (4,483 | ) | (4,510 | ) | (7,664 | ) | (50,917 | ) | ||||||||||||
Other income (expense): |
||||||||||||||||||||||
Gain on sale of royalty rights |
816 | — | 816 | — | 3,656 | |||||||||||||||||
Interest expense |
(8 | ) | (10 | ) | (19 | ) | (22 | ) | (7,801 | ) | ||||||||||||
Interest income |
8 | 46 | 20 | 111 | 725 | |||||||||||||||||
Net loss |
(2,102 | ) | (4,447 | ) | (3,693 | ) | (7,575 | ) | (54,337 | ) | ||||||||||||
Accretion of Series A preferred stock
mandatory
redemption obligation |
— | — | — | — | (1,872 | ) | ||||||||||||||||
Series A preferred stock redemption fee |
— | — | — | — | (1,700 | ) | ||||||||||||||||
Beneficial conversion feature of Series D preferred
stock |
— | — | — | — | (4,274 | ) | ||||||||||||||||
Net loss applicable
to common
stockholders |
$ | (2,102 | ) | $ | (4,447 | ) | $ | (3,693 | ) | $ | (7,575 | ) | $ | (62,183 | ) | |||||||
Net loss per share
applicable to
common stockholders
- - basic and diluted |
$ | (0.11 | ) | $ | (0.26 | ) | $ | (0.20 | ) | $ | (0.45 | ) | ||||||||||
Weighted average
shares used in
computing basic and
diluted loss per
share |
18,933 | 16,885 | 18,286 | 16,882 | ||||||||||||||||||
See accompanying notes to condensed financial statements.
4
Northwest Biotherapeutics, Inc.
(A Development Stage Company)
Condensed Statement of Cash Flows
(unaudited)
(in thousands)
| Six Months Ended | Period from | ||||||||||||||
| June 30, | March 18, 1996 | ||||||||||||||
| (Inception) to | |||||||||||||||
| 2003 | 2002 | June 30, 2003 | |||||||||||||
Cash Flows from Operating Activities: |
|||||||||||||||
Net Loss |
$ | (3,693 | ) | $ | (7,575 | ) | $ | (54,337 | ) | ||||||
Reconciliation
of net loss to net cash used in operating activities: |
|||||||||||||||
Depreciation and amortization |
137 | 305 | 2,000 | ||||||||||||
Amortization of deferred financing costs |
— | — | 320 | ||||||||||||
Amortization debt discount |
— | — | 5,749 | ||||||||||||
Accrued interest converted to preferred stock |
— | — | 260 | ||||||||||||
Stock-based compensation costs |
169 | 317 | 969 | ||||||||||||
Loss on sale and disposal of property and equipment |
904 | — | 1,386 | ||||||||||||
Gain on sale of intellectual property and royalty rights |
(816 | ) | — | (3,656 | ) | ||||||||||
Asset impairment loss |
— | — | 1,032 | ||||||||||||
Loss
on facility sublease and lease cancellation |
174 | — | 895 | ||||||||||||
Increase (decrease) in cash resulting from changes in assets and liabilities |
|||||||||||||||
Accounts receivable |
(85 | ) | 55 | (88 | ) | ||||||||||
Prepaid expenses and other current assets |
426 | 19 | 291 | ||||||||||||
Accounts payable and accrued expenses |
(197 | ) | (296 | ) | 940 | ||||||||||
Accrued loss on sublease |
(266 | ) | — | — | |||||||||||
Deferred rent |
44 | 73 | — | ||||||||||||
Net Cash used in Operating Activities |
(3,203 | ) | (7,102 | ) | (44,239 | ) | |||||||||
Cash Flows from Investing Activities: |
|||||||||||||||
Purchase of property and equipment, net |
(134 | ) | (515 | ) | (4,522 | ) | |||||||||
Proceeds from sale of property and equipment |
44 | — | 44 | ||||||||||||
Proceeds from sale of intellectual property and royalty rights |
— | — | 1,000 | ||||||||||||
Proceeds from sale of marketable securities |
1,828 | — | 2,000 | ||||||||||||
Restricted cash |
— | (104 | ) | (1,109 | ) | ||||||||||
Net
Cash provided by (used in) Investing Activities |
1,738 | (619 | ) | (2,587 | ) | ||||||||||
Cash Flows from Financing Activities: |
|||||||||||||||
Proceeds from issuance of note payable to stockholder |
— | — | 1,650 | ||||||||||||
Repayment of note payable to stockholder |
— | — | (1,650 | ) | |||||||||||
Proceeds from issuance of convertible promissory note and warrants, net of issuance costs |
— | — | 5,064 | ||||||||||||
Borrowing under line of credit, Northwest Hospital |
— | — | 2,834 | ||||||||||||
Repayment of line of credit to Northwest Hospital |
— | — | (2,834 | ) | |||||||||||
Payment on capital lease obligations |
(50 | ) | (34 | ) | (215 | ) | |||||||||
Payments on note payable |
(315 | ) | — | (315 | ) | ||||||||||
Proceeds from issuance preferred stock, net |
— | — | 27,432 | ||||||||||||